[Congressional Record (Bound Edition), Volume 149 (2003), Part 19]
[Senate]
[Pages 26889-26904]
[From the U.S. Government Publishing Office, www.gpo.gov]




   NATIONAL CONSUMER CREDIT REPORTING SYSTEM IMPROVEMENT ACT OF 2003

  The PRESIDING OFFICER. Under the previous order, the Senate will 
proceed to consideration of S. 1753, which the clerk will report.
  The assistant legislative clerk read as follows:

       A bill (S. 1753) to amend the Fair Credit Reporting Act in 
     order to prevent identity theft, to improve the use of and 
     consumer access to consumer reports, to enhance the accuracy 
     of consumer reports, to limit the sharing of certain consumer 
     information, to improve financial education and literacy, and 
     for other purposes.

  The PRESIDING OFFICER. The Senator from Nevada.


                            Healthy Forests

  Mr. REID. Madam President, I see the chairman of the committee is 
here. I will speak for a minute while he is getting affairs in order to 
respond briefly to the Senator from Kentucky about the Healthy Forests 
initiative.
  The statement has been made that hundreds of thousands of acres have

[[Page 26890]]

burned in the last few years. But we have had millions of acres burned. 
We understand what it means to have wildfires. As a neighbor to 
California, Nevada sent 500 firefighters and dozens of pieces of 
equipment to help fight the fires in California. We in Nevada 
understand what fires are all about. I think most everyone in the 
country understands how devastating these fires have been. But for 
anyone to come to the floor and suggest we are fiddling while Rome 
burns, that is simply untrue.
  Here is what we are concerned about. We have a situation where we 
have been eliminated from the conference process. Remember that the 
Senate is 49 to 51. It is not as if there is a huge majority. We have 
been eliminated from conferences. People are saying, Isn't it nice that 
the Medicare conference is allowing two Democrats in on the conference. 
But for any other Democrats to come, the conference is closed. For most 
conferences, we don't have anybody.
  What we have suggested on this bill and on the CARE Act and a number 
of other matters is that we go ahead and send what has been passed in 
the Senate to the House. If the House doesn't like it, they can send it 
back with amendments. We have done that many times. This is not an 
unusual procedure. We need only look at what we did last night with the 
Fallen Patriots Tax Relief Act. That is how that happened. There was no 
big cry of concern about that.
  We haven't had the opportunity to do complete research. H.R. 1584, 
the Clean Diamond Trade Act; H.R. 1298, AIDS Assistance Bill; H.R. 733, 
McLaughlin House National Historic Site Act; H.R. 13, Museum Library 
Services Act; H.R. 3146, TANF Extension; and H.R. 659, Mortgage 
Insurance Act--these are just a few of the pieces of legislation we 
have handled in this manner.
  If the majority wants this act to pass--and I am sure they do--the 
best thing to do would be to take what has taken place here in the 
Senate and send it across the hall to the House. If there is something 
they do not like about it, send it back to us with an amendment. It 
happens all the time. It is not unusual. In fact, in years past that is 
how it was done. Conferences were not used as much as they are used 
now.
  The way we have been treated with conferences, they are going to have 
a lot less because you can't have conferences where there is no 
conference. Basically, the majority meets in secret, and when they 
complete their secret meetings, they bring the conference report and 
say take it or leave it. That is the wrong way to do things.
  That is what this is all about. We want the Healthy Forests 
initiative to pass. We wanted it to pass yesterday--not tomorrow but 
yesterday. It is an important piece of legislation. That is indicated 
by the vote that came out of the Senate.
  Therefore, take what we passed, send it to the House, and if they 
don't like it, they can send it back with amendments.
  Mr. CRAIG. Madam President, will the Senator yield for a question?
  Mr. REID. I am happy to yield to my friend from Idaho.
  Mr. CRAIG. Is it not true what I said on the floor, that you are 
objecting to appointing conferees to the Healthy Forests initiative so 
it can go to conference between the House and Senate? Is that not true?
  Mr. REID. Yes. It is absolutely true. That is the point I tried to 
make last night dealing with the CARE Act and today. I apologize; I was 
in a meeting with Senator Daschle and I was unable to listen to your 
speech. But the answer is absolutely yes. That is the point I was 
making.
  Mr. CRAIG. The point is the bill is not moving because your side is 
objecting to what is a normal process here in the conference.
  Mr. REID. No. I say to my friend the bill is not moving because the 
majority has decided to harp on the fact that there is not a conference 
named----
  Mr. CRAIG. I guess my point is made.
  Mr. REID. Please. I have the floor. The fact of the matter is 
conferences have been held around here. What I am saying is the 
majority has a choice. If they want the healthy initiative bill--which 
we badly want--then I think what we should do is take what has been 
passed and send it to the House. If they don't like it, let them bring 
it back with amendments.
  There are two ways of doing it. One way is the way the Senator from 
Idaho suggests. The conferees could be appointed and take it over to 
the House, and we meet someplace else. That is the normal way.
  Frankly, since we have lost control of the majority, we haven't held 
conferences. I have talked about that at some length on previous 
occasions. I touched on it briefly here today.
  We want a bill passed.
  The Senator from Idaho is absolutely right. The Democratic leader, in 
representing the Democratic caucus, has said let us not do a conference 
because it is meaningless, anyway. Let us take our bill we have passed 
and work on it. We had a big vote here. Send it to the House, and they 
can come within a matter of hours with something they don't like about 
it, and we will be happy to review that when it comes back in a matter 
of hours.
  Mr. CRAIG. I thank the Senator.
  Mr. REID. I want to tell my friend from Alabama how much I appreciate 
his patience while we finished this little scrum on the floor today.
  I look forward to this most important piece of legislation. This is 
brought to the floor on a bipartisan basis. We have spent time speaking 
with the Senator from Alabama at some length in getting the bill here, 
dealing with the same problem we are having in the conferences.
  I wish that all Senators had the sense of what legislation is all 
about as does the Senator from Alabama. He, in my mind, is truly a 
legislator. I have enjoyed working with him in the House and in the 
Senate. There is no question that this bill is here as a result of his 
reaching out to the Democrats on the committee. They have told me that. 
There are Democratic amendments in the mark now before the Senate. On 
behalf of those in the minority, through the Chair, we express our 
appreciation to the Senator from Alabama, the chairman of the Banking 
Committee.
  The PRESIDING OFFICER (Mr. Enzi). The Senator from Alabama.


                           Amendment No. 2053

  Mr. SHELBY. Mr. President, I send a substitute amendment to the desk 
and ask for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Alabama [Mr. Shelby] proposes an amendment 
     numbered 2053.

  (The amendment is printed in today's Record under ``Text of 
Amendments.'')
  Mr. SHELBY. It is our intention to adopt the substitute and ask it be 
treated as original text but we will wait for the other side before we 
adopt the amendment.
  Mr. President, I am pleased to bring before the Senate S. 1753, the 
National Consumer Credit System Improvement Act of 2003. This bill was 
unanimously approved by the Senate Banking Committee on September 23 of 
this year by a voice vote.
  The Fair Credit Reporting Act, is a very important, highly complex 
law that governs crucial aspects of the consumer credit system. This 
national system is huge--involving trillions of dollars and millions of 
people, and is at the heart of the economic well being of this country. 
The bipartisan bill before the Senate is the product of extensive 
hearings and deliberations by the Senate Banking Committee. Over the 
course of the past 5 months, the Banking Committee held six hearings 
related to the reauthorization of the seven expiring FCRA national 
standards as well as the effectiveness and efficacy of the FCRA as a 
whole.
  The committee's process helped us identify key areas that required 
reform or improvement, while at the same time, reinforcing the 
importance of our national credit reporting system to the operation of 
our financial markets and economy as a whole. The committee bill 
incorporates many important reforms while creating permanent national 
standards. This bill reflects a careful balance between ensuring the 
efficient operation of our markets and protecting the rights of 
consumers.

[[Page 26891]]

  Over the 6 years since the FCRA was last amended, significant changes 
have occurred in our credit markets. There are now participants, new 
technologies, new underwriting practices, and new products. Indeed, 
there is more that has changed than has remained the same in the 
operation of the credit markets since the last time Congress considered 
the FCRA. These changes have been largely positive. They have expanded 
access to credit to more Americans and permitted loan approvals in 
hours rather than weeks.
  However, these new developments have had some unintended 
consequences.
  Identity theft. As our economy has grown more automated, more 
electronic transactions occur without the lender and borrower ever 
meeting face to face. As a result, the transfer of information has 
become much more pervasive, and a new crime has emerged that takes 
advantage of this flow of information. This crime is called identity 
theft, and the incidence of this crime has grown geometrically in 
recent years.
  Identity theft involves a person using someone else's personal 
information without their knowledge to commit fraud or theft. 
Practically speaking, the crime involves misappropriation of such 
personal information as a victim's name, date of birth, and social 
security number. Identity thieves then use this information to open new 
credit card accounts, to divert current accounts from victims to 
themselves, and to open bank accounts in victims' names, among other 
things. The bad charges and the hot checks usually happen while the 
victims, banks, credit card companies and other firms are unaware that 
something is amiss.
  In the wake of unauthorized activity and skipped payments, the 
creditor usually takes action and ultimately cuts the thief off. At 
this point, the creditor's losses are curtailed, but the nightmare is 
just beginning for the ultimate victim of identity theft--the 
individual whose identity the thief assumed. In most instances, the 
victims first become aware of the fact that they have been targeted 
when the creditor seeks payment. It is also when they begin to 
experience the negative consequences--dealing with law enforcement and 
the collection agencies.
  Thereafter, when the results of the criminals' handiwork shows up on 
their credit reports, they face the considerable task of restoring 
their good name and credit rating.
  This bill attempts to combat this growing crime while also helping 
consumers restore their credit standing and give victims assistance. 
The bill contains a number of provisions that deal with identity theft:
  S. 1753 directs Federal banking regulators, the National Credit Union 
Administration and the Federal Trade Commission to develop guidelines 
and regulations to identify and prevent identity theft;
  The bill mandates the inclusion of fraud alerts in credit files, to 
notify users of credit reports that a consumer could be a victim of 
identity theft;
  The bill will restrict the amount of information available to 
identity thieves, by requiring the truncation of credit and debit card 
account numbers on electronically printed receipts; and
  S. 1753 increases the punishment of identity theft crimes.
  S. 1753 also provides victims of identity theft with meaningful 
assistance something they do not really have today:
  The bill requires the FTC to prepare a summary of rights of identity 
theft victims;
  S. 1753 establishes procedures to block the reporting of and the 
refurnishing of identity theft-related activities; and it requires the 
national credit reporting agencies to coordinate and share identity 
theft complaints.
  Another aspect of this bill is accuracy. The committee also focused 
its attention on how best to ensure the accuracy of credit information. 
Accurate credit reports are absolutely crucial to the efficient 
operation of our credit market. Indeed, the changing nature of our 
credit markets has made accuracy more important than ever. Credit 
report information is increasingly used as the key determinant of the 
cost of credit and insurance in this country.
  In addition, technology has permitted lenders to use credit 
information to more precisely assess risks posed by borrowers. Gone are 
the day when lenders merely stamped loans as ``approved'' or ``not 
approved.'' Today, the lenders employing credit history data, use 
mathematical models to analyze credit risk and create risk-based prices 
for credit cards, mortgages and other products. Use of risk-based 
pricing allows lenders to extend credit to a broader range of borrowers 
on credit terms, which match the credit risk they pose. Additionally, 
its use results in very few credit applicants being rejected. Again 
this is a very positive development, but not one without a cost.
  Currently, credit applicants who are rejected received adverse action 
notices and access to a free credit reports. This allows such consumers 
to review the accuracy of their credit report information. Due to risk-
based pricing, consumers are often not given the adverse action notice 
when information contained in their credit report significantly impacts 
the cost of the credit offer. Rather, they receive a counteroffer with 
credit offered at a higher price or with more restricted terms.
  This development presents a huge concern. The adverse action notice 
is the primary tool in the FCRA to ensure mistakes in credit reports 
are discovered. To address this situation, the committee bill requires 
regulators to promulgate rules to provide consumers notice when, 
because of information contained in a consumer's credit report, the 
creditor makes a counter offer to the consumer on terms that are 
materially less favorable than the most favorable terms available to a 
substantial portion of consumers.
  These notices will make consumers aware of the need to check their 
reports to ensure their accuracy. The need for ensuring the greatest 
possible accuracy in credit information does not end with these new 
notices. For example, in large credit transactions, such as mortgages, 
rate differences, as the Presiding Officer knows, can translate into 
hundreds of thousands of dollars over the course of a loan. Even in 
smaller dollar credit transactions, such as credit cards, rate 
differences can mean large amounts of money.
  With the practice of credit card companies reviewing credit reports 
and adjusting rates in real time becoming more prevalent, the 
application of risk-based pricing to consumer finances is practically 
an everyday event.
  Credit reporting information is increasingly used as the key 
determinant of the cost of credit or insurance. With the rewards for 
good credit so meaningful in this country, and the penalties for bad 
credit so costly, it is more critical than ever before that credit 
reports accurately portray consumers' credit histories.
  The committee bill addresses this in several ways. One, the bill 
provides consumers the right to obtain a free copy of their credit 
report annually through a centralized system and request of their 
credit scores or information about credit scores in certain 
circumstances. This is a big change.
  S. 1753 directs the Federal banking regulators, the National Credit 
Union Administration, and the Federal Trade Commission to develop 
guidelines to ensure greater accuracy and completeness of information 
in credit reports.
  Furthermore, it directs the Federal Trade Commission and the Federal 
Reserve to conduct ongoing studies on the accuracy of consumer reports 
and the resolution of consumer complaints.
  Privacy protections are addressed in this bill. S. 1753, the bill 
before us, contains a number of important new privacy protections for 
consumers. The committee-designed protections are based on our 
extensive deliberations and focus on core areas of concern in the 
privacy arena; namely, direct marketing and medical information.
  The bill contains important new medical information protections which 
significantly limit creditors' use of consumer medical information and 
restrict the dissemination of medical information in credit reports. 
These provisions require the coding of medical information that is 
included in credit

[[Page 26892]]

reports and prohibits creditors from obtaining or using medical 
information in determining a consumer's eligibility for credit.
  S. 1753 also requires affiliated companies to give consumers notice 
and an opportunity to opt out of direct marketing. In addition, the 
bill requires the regulators to study information-sharing practices of 
affiliated companies and the level of consumer understanding.
  Financial literacy was another topic of our committee deliberations. 
The committee understands that informed, knowledgeable consumers are 
best positioned to take advantage of new credit products and to reduce 
the likelihood of falling prey to negative developments, such as 
identity theft. Financial education is crucial to the effective 
operation of our credit markets since the Fair Credit Reporting Act 
places significant responsibility on the consumer to ensure the 
accuracy of their credit reports. For these reasons, the bill 
establishes the Financial Literacy and Education Commission to review 
and create Federal programs and coordinate the existing financial 
literacy efforts already established.
  The committee has devoted a significant amount of time and energy in 
this bill to build a complete and thorough record on the highly complex 
issues involved with the Fair Credit Reporting Act. The legislation we 
are considering today, which was passed unanimously out of the Banking 
Committee, reflects the time and consensus achieved during that 
process.
  It contains language that was developed by a number of my colleagues 
on both sides of the aisle, and I thank all of them for their efforts. 
I also particularly thank the ranking member and former chairman, 
Senator Sarbanes, for his insight and the significant contributions he 
and his staff have added as we have moved through this process over the 
course of the year.
  I believe we have achieved the difficult objective of striking the 
proper balance between enhancing the rights of consumers and improving 
the efficient operation of our credit markets.
  Mr. President, I now yield the floor to my distinguished colleague 
from Maryland, the ranking Democrat.
  The PRESIDING OFFICER. The Senator from Maryland.
  Mr. SARBANES. Mr. President, I am pleased to join this morning in 
bringing to the floor of the Senate, along with my able colleague from 
Alabama, the distinguished chairman of the Senate Banking, Housing, and 
Urban Affairs Committee, S. 1753, the National Consumer Credit 
Reporting System Improvement Act of 2003.
  This legislation is important to millions of Americans as we work to 
ensure fair, accurate, and effective credit reporting practices, and 
this legislation is designed to accomplish that objective.
  First, I acknowledge and actually commend the distinguished chairman 
for the comprehensive series of six hearings on this legislation that 
were held in the Banking Committee. Chairman Shelby structured 
extremely productive hearings. There was a systematic approach to 
examining all aspects of this issue, and we heard from a broad range of 
interests in the witnesses who came before the committee. I think it is 
fair to say we covered all the bases.
  Not all the bases got what they wanted. It never quite works that way 
when you do legislation. But I think we had a very open, transparent 
process, with people having an opportunity to present their positions. 
They were very carefully and thoughtfully considered. In the end, the 
legislation was reported out of the committee, on a voice vote, 
unanimously on September 23. I think that vote reflects the response to 
the chairman's willingness to work with all members of the committee.
  Now, it goes without saying, each of us, if we could write the bill 
by ourselves, would have somewhat different aspects to the bill. There 
are areas where I would have sought to do more with respect to some 
consumer issues. But I think we sought to craft a balanced package 
here. We understand the need for a national credit reporting system for 
Americans all across the country. It means an opportunity to carry out 
their economic transactions swiftly, efficiently, and effectively. At 
the same time, of course, you have to be very alert to ensuring there 
are protections so people cannot be abused or taken advantage of in the 
process.
  One of the things this legislation does--and I am going to refer to 
it in some detail very shortly--is it really seeks to address this 
issue of identity theft which has provoked so much misery and grief for 
people who are hit by it. It is really the central focus of people's 
attention now when they consider problems they are having with consumer 
financial matters. This legislation has some very significant 
provisions in that regard, and we were able to move those forward with 
the strong support of the members of the committee.
  The Fair Credit Reporting Act, which this legislation, of course, 
affects provides for the ways in which credit information is gathered, 
disseminated, and used.
  During the hearings, we received a number of recommendations for 
improving the operation of the act.
  Among other things, the suggestions addressed: combating fraud and 
identity theft, protecting consumers' financial privacy, clarifying the 
credit scoring process and the use of credit scores, enhancing 
regulatory and enforcement authority, improving the accuracy of credit 
reports, improving consumers' understanding of the credit reporting 
process, combating abusive marketing practices, and finding ways to 
improve the financial literacy and education of all consumers.
  I believe we have taken important steps to address all of these 
issues. The Senate bill includes a number of provisions that will 
result in enhanced consumer protections by helping to ensure accuracy 
of credit report information and fair practices in the collection and 
use of credit information and in the granting of credit.
  Among other things this legislation will: provide consumers with free 
credit reports annually from the national credit bureaus and provide 
consumers with an easy method to obtain their free credit reports. This 
has heretofore not been available. It will require a summary of 
consumers' rights to opt out of prescreened offers; provide for 
accuracy guidelines; lengthen the statute of limitations for all FCRA 
violations; enhance identity theft penalties; extend the situations in 
which adverse action notices are provided to consumers; prohibit the 
sale, transfer, or collection of identity theft debt, so that such bad 
debt will not be perpetuated in the credit system; provide consumers 
with the right to opt out of marketing that results from affiliate 
information sharing, with certain exceptions to that right. Finally, of 
course, it will help enhance the financial literacy of all Americans.
  Let me discuss some of these items in a little more detail.
  First, accuracy. I don't think it needs much elaboration for people 
to understand that accuracy of credit reporting information is integral 
to our reporting process. Erroneous information on credit reports can 
often take a significant investment of time and money to remove. They 
can be extremely costly to consumers by significantly raising borrowing 
costs. Insurers, mortgage banks, and other financial institutions rely 
significantly on credit scores to make credit decisions. Therefore, 
inaccuracies in the underlying credit reports can make it more 
difficult and more expensive for Americans seeking to make major 
purchases. Yet we heard testimony in those extensive hearings, to which 
I referred earlier, that credit report inaccuracies is one of the major 
problems that plague consumers. This legislation addresses that with 
substantial measures in that regard.
  In order to enhance the accuracy of credit reports, the bill directs 
the Federal banking agencies, the National Credit Union Association, 
and the Federal Trade Commission to issue guidelines and promulgate 
regulations with respect to the accuracy and completeness of credit 
report information.
  Second, free credit reports. The bill allows consumers to receive a 
free credit report annually from each of the three national credit 
reporting agencies. The bill also requires the FTC to

[[Page 26893]]

take steps to make it easier for consumers to obtain their free report, 
including: setting out rules requiring that a centralized, streamlined 
method be established so consumers can easily obtain free reports, and 
actively publicizing and conspicuously posting on its Web site--the FTC 
Web site--the rights available to consumers under the FCRA, including 
the consumer's right to a free report.
  The provision of free credit reports is a significant step in helping 
consumers to ensure the accuracy of their credit report information, 
and helping them identify possible instances of identity theft.
  As to prescreening, under the FCRA, credit reporting agencies may 
generate for creditors prescreened lists of individuals with certain 
credit characteristics to be targeted to receive a direct mailing. This 
prescreening process results in much of the unsolicited mail credit 
offers that consumers receive and about which they often complain.
  The success of the FTC's Do Not Call Registry has highlighted the 
frustration of Americans with unsolicited telephone offers. Under the 
Senate bill, creditors making such unsolicited offers of credit to 
consumers by mail will be required to include a summary of the 
consumers' rights to opt out of prescreening in their offers to 
consumers. In addition, this Senate bill increases the effective period 
of the telephone opt-out of prescreening from 2 to 7 years.
  With regard to adverse action notices, under the current law, the 
FCRA, a consumer receives an adverse action notice after denial or 
cancellation of insurance, a denial of credit, or a denial of 
employment, based on information in the consumer's credit report. This 
adverse action notice then triggers a consumer's right to a free credit 
report and other of CRA disclosures.
  Those are the provisions that have heretofore been in the law. What 
has happened, of course, is that, as the industry has grown more 
sophisticated in the technology, we are having a move to risk-based 
pricing. So there are many circumstances in which a consumer may apply 
for credit, but rather than receiving an outright denial, which is what 
happened in earlier days, which then was an adverse action and gave the 
consumer certain rights, the consumer may receive credit at an elevated 
rate or cost because of information on the consumer's credit report. In 
these situations, because a consumer has received credit, albeit at 
more rigorous terms, the consumer is not considered to have experienced 
an adverse action. Therefore, no FCRA rights are triggered.
  This legislation now before us incorporates a recommendation made to 
us by the Federal Trade Commission to update the provision of adverse 
action notices so consumers are aware that information in their credit 
report is negatively affecting the rates they are paying for credit. 
Therefore, because they become aware of it, it gives them an 
opportunity to examine that information and to correct it if, in fact, 
it should be inaccurate.
  Finally, in addition, the Senate bill takes important steps to 
improve the financial literacy of consumers by establishing a financial 
literacy and education commission within the Federal Government, which 
will coordinate the promotion of Federal financial literacy efforts, 
and will develop a national strategy to promote financial literacy and 
education.
  I commend Senators Enzi and Stabenow, along with Senators Corzine and 
Akaka, and many others, for their leadership in this important area of 
financial literacy. Senator Enzi and Senator Stabenow and Senator 
Corzine and Senator Akaka, for a long time--really, since I have known 
them--have been interested in this issue. We are pleased there is a 
title in the bill that carries forward important efforts in this 
regard.
  Let me turn to identity theft. I indicated at the outset that this 
was an issue of increasing concern across the country. Before I do 
that, I will simply mention a step that we took in this legislation 
with respect to affiliate sharing. This legislation contains provisions 
relating to the ability of financial companies to market to their 
customers based on private financial information of the customer that 
has been shared among affiliates.
  The bill would require affiliates who share customer information for 
solicitation or marketing purposes--and most of the concern we have 
heard in this area has been with the use of this information for 
solicitation or marketing purposes--to disclose such sharing to 
consumers and to provide them with an opportunity to opt out of the 
marketing resulting from such sharing of information.
  There are exceptions in the legislation with respect to this 
provision for preexisting customers, for service providers, and for the 
institutions responding to a consumer request. So on the solicitation 
for marketing, we are trying to address much of the concern that has 
been expressed to us, but we have been trying to do it in a very 
careful way so that the basic purposes of the legislation can be 
carried forward.
  I want to spend just a few moments on identity theft because it is 
such an important issue now. We heard some absolute horror stories 
before the committee from witnesses who had experienced identity theft 
and what it has done to their lives--virtually destroyed their lives. 
Obviously, we have to deal in every way that is reasonably possible 
with this issue. It has become an increasing problem in recent years.
  The Federal Trade Commission reported that the number of identity 
theft complaints it received last year far exceeded complaints about 
any other type of consumer fraud. Americans have serious concerns about 
this issue. Businesses incur significant costs dealing with identity 
theft. Honest citizens who are victims of identity theft incur very 
high costs in money, in time, in anxiety, and in an effort to correct 
and restore their spoiled credit histories and good names. Someone 
steals their identity and then uses it, and their whole credit record 
is being destroyed. Then it is almost impossible for them to function 
in a normal economic way in our society.
  This bill contains a number of important provisions that will address 
identity theft, and I commend not only the chairman but the members of 
the committee--all of the members of the committee--who were prepared 
to focus on this issue and give it a very high priority as we sought to 
move this legislation forward.
  The bill will allow consumers to place fraud alerts on their consumer 
reports. It will allow military personnel to place alerts on their 
reports indicating their active duty status. So there is a special 
concern for our men and women in the military.
  The bill provides for free credit reports after a fraud alert. 
Consumers will be able to get two free credit reports in the year after 
a fraud alert is placed in their file, as they seek to clean up the 
situation and to remedy it.
  As to account blocking, the bill will allow identity theft victims to 
direct consumer reporting agencies to stop furnishing information 
regarding the accounts associated with identity theft.
  ``One call'' policy: The bill will require that the national credit 
reporting agencies that receive consumer calls about identity theft 
direct the complaint to the other national agencies so that identity 
theft victims need not contact each agency separately. They can make 
one contact, and then the information is disseminated on identity 
theft.
  With regard to notification of fraudulent information, the bill will 
require debt collectors who learn that information in a consumer report 
is fraudulent, maybe the result of identity theft, to notify the 
creditor of the fraudulent information.
  On truncation of account numbers, the bill will require that 
businesses truncate credit or debit card numbers on electronic 
receipts.
  And on prohibition of the sale of identity theft, the bill protects 
consumers by prohibiting the sale, transfer, or collection of a debt 
where a consumer is an identity theft victim with respect to that debt. 
This will help to prevent identity theft debt from being perpetuated 
within the credit system.

[[Page 26894]]

  I want particularly to note the leadership of Senator Cantwell with 
respect to identity theft. Her identity theft legislation actually 
passed on the floor of the Senate last year, and this bill incorporates 
many of the provisions that were in her legislation, including an 
extension of the statute of limitations and the blocking provisions. I 
know she has worked closely with Senator Enzi in that regard in trying 
to address this identity theft issue.
  I also want to acknowledge the work that Senator Feinstein has also 
done on the identity theft question. We are most appreciative of her 
efforts in this regard as well.
  This is just a summary of a number of the provisions of this 
legislation which I think extends important protections to consumers. 
The bill provides a number of important improvements in the credit 
reporting system.
  As I mentioned earlier, this legislation was voted out of the 
committee on a voice vote. There are certain provisions of the existing 
legislation that will expire on January 1, 2004. Therefore, it is 
important this legislation be enacted before the end of this session.
  I close by again thanking the chairman for the very fair and balanced 
way in which the hearings were conducted and in which the markup took 
place. We sometimes put down or minimize the importance of process. It 
is not a very catchy word, ``process,'' but a good deal of what we try 
to do here and when you try to make this democratic process work 
involves process. It involves how you go about considering issues and 
how open and fair you are in doing it; how the majority treats the 
minority and how the minority responds to the treatment it receives 
from the majority. I believe a good process contributes to good 
legislation, that it is an important part of formulating legislation 
and arriving at the building of a consensus to address important 
problems.
  I simply want to say to my colleagues that I think the process that 
was followed in this instance was as it should have been, and I think 
the fact we bring this legislation to the floor out of the committee 
with a unanimous vote is, in part, a consequence of that process. I 
again thank and commend the chairman in that regard.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from North Carolina.
  Mr. DOLE. Mr. President, I am in strong support of S. 1753 to renew 
uniform national standards for managing consumer credit information. 
These provisions are due to expire January 1, and this legislation is 
vitally important so that economic empowerment can become a reality for 
all Americans.
  Since it was first enacted in 1970, the Fair Credit Reporting Act has 
served an important role in this Nation. Indeed, it is astounding to 
consider the fundamental changes which have occurred in our credit 
system.
  In 1970, credit card charges over $20 required the store owner to 
call the creditor who would then have an employee go through a card 
catalog system to approve the transaction. Today, it takes just 
seconds, even when you are on the other side of the world. While we 
take this innovation for granted, it demonstrates how much our system 
of payments has changed.
  In addition, the provisions of the Fair Credit Reporting Act have 
also been responsible for many of the advancements in how we choose 
financial products which best meet our needs. Today a fairer and faster 
system of assessing an individual's financial responsibility means that 
consumers now have quick access to competitive offers for credit, 
insurance, or other financial products.
  Clearly, our current credit system has benefited individuals at every 
level of the economic ladder, and that has meant new opportunities for 
people who never before had access to credit. Judgments based on race 
and gender have been taken out of the equation of creditworthiness.
  No longer is collateral necessary when qualifying for a loan. People 
can now move on to the ladder of economic success simply by proving 
they can responsibly handle their financial affairs. Given this 
opportunity to reauthorize the Fair Credit Reporting Act, we must 
ensure that our actions do not result in increases to the cost of 
credit or lower access to credit. Both would have harmful effects on 
our recovering economy. At the same time, we must ensure that the law 
applies to everyone fairly and that the system to protect consumers 
against questionable material on credit reports operates efficiently 
and effectively.
  Recently, in the Banking Committee, we heard testimony about the harm 
caused to consumers who had false information on their credit reports 
as a result of mistakes or fraud. The legislation before us contains 
initiatives to increase the accuracy of credit reports, including 
providing consumers with one free credit report each year. This free 
report will give consumers a better understanding of the factors 
financial institutions take into account when pricing a product and 
when deciding whether to extend credit.
  Free credit reports will also ensure the accuracy of reports since 
consumers are best able to identify incorrect and false information. 
This will go a long way in stopping identity theft, a destructive crime 
that is, unfortunately, growing more common each day.
  This legislation also continues one of the most important provisions 
from the 1996 act, and that is affiliate sharing. Consumers clearly 
benefit when they are able to call a single person in their financial 
institution and that customer service agent is able to access each of 
their different accounts at once. We all know the frustration of being 
transferred from person to person when we are attempting to get 
questions answered. With these provisions, more institutions are able 
to develop systems to minimize the need to transfer customers from 
department to department. It also saves consumers time and money when 
financial institutions are able to realize greater efficiencies by 
consolidating customer service and administrative functions for their 
affiliate businesses.
  Let me be clear. Privacy of personal information is extremely 
important, and I continue to work to implement reasonable protections. 
However, we must strive for a balance and we must not sacrifice the 
efficiency of our credit system in the name of privacy. In many ways, I 
believe our responsibility is like that of doctors in the Hippocratic 
oath: First do no harm.
  Just as importantly, affiliate sharing assists financial institutions 
in their antiterrorism efforts by helping them detect and prevent money 
laundering. A customer service agent who can review all of the 
consumers' accounts is more likely to spot potential problems or 
concerns.
  The average American moves every 6 years. This is about 17 percent of 
the U.S. population, more than two-thirds higher than any other 
country. Our national uniform credit system plays a significant role in 
increasing the mobility of labor and in the ability of consumers to 
move while keeping portable credit reputations that preserve their 
access to low-cost credit. Advances such as these have ripple effects 
that help our communities tremendously. The families served find 
themselves with more money since the costs of their financial needs 
decrease, they have access to credit and loans to meet the needs of 
their families, and they are able to establish a good credit record so 
that they are eligible to obtain a home mortgage.
  Because of the Fair Credit Reporting Act, families are able to build 
wealth, many for the first time. They are able to provide greater 
stability for their families, and in turn they become more involved in 
their communities. It is the modern American dream so many consumers 
are beginning to realize because of our efficient and effective credit 
system. It is important that Congress act quickly to renew these 
uniform national standards for managing consumer credit information. 
Consumers and the financial sector will most definitely feel the impact 
if these provisions expire. The benefits to our communities and our 
economy are endless.
  I certainly thank Chairman Shelby for his excellent work on this 
legislation. His ability to resolve issues and

[[Page 26895]]

work with all the parties is a true testament to his leadership. It is 
a privilege to serve on his committee.
  I also thank Senator Sarbanes for his tireless advocacy on behalf of 
consumers. Similar legislation has already passed overwhelmingly in the 
House. I urge all of my colleagues to join this truly bipartisan 
coalition of Senators in acknowledging the benefits the Fair Credit 
Reporting Act has brought to our Nation.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Alabama.
  Mr. SHELBY. Mr. President, I thank the Senator from South Dakota for 
permitting me to do this. I ask unanimous consent that the substitute 
amendment be adopted and considered original text for the purposes of 
further amendment and that no points of order be waived by this 
agreement.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. JOHNSON. Mr. President, I thank the leadership for moving to 
floor consideration of S. 1753, which amends the Fair Credit Reporting 
Act. This bill, which was approved unanimously by the Senate Banking 
Committee, will ensure that millions of Americans continue to have 
access to affordable credit under a uniform national standard that 
includes significant new consumer protections.
  Similar legislation was passed out of the House of Representatives 
recently by an overwhelmingly bipartisan vote of 392 to 30. Only 
occasionally do we have the chance to vote for a bipartisan bill that 
so ably balances the needs of consumers and business.
  Under the leadership of Chairman Shelby and ranking member Sarbanes, 
we have achieved a product that is good for everyone. In the area of 
consumer credit, we have a rare convergence of interests. What is good 
for consumers helps business to expand, which in turn helps to give 
consumers more choice. The end result is a stronger economy.
  I urge my colleagues not to squander this opportunity to send a 
decisive message that we are committed to protecting and improving a 
pillar of this Nation's economy, and that is the consumer credit 
market.
  It is a testament to the success of our national credit reporting 
system that few people have heard of the Fair Credit Reporting Act or 
FCRA. FCRA is the statute that governs the collection and use of 
personal credit data that make up an individual's credit report. That 
credit history, in turn, allows Americans to access the credit markets 
in whatever form meets their needs. For example, millions of Americans 
have refinanced their mortgages over the past year to take advantage of 
historically low interest rates. Others have applied for low-cost auto 
financing. Most Americans have some form of revolving credit line that 
helps them to meet certain payment needs.
  Very rarely do we stop to ask ourselves why is it that we can walk 
into a bank, walk into a store or credit union, or apply over the phone 
or the Internet for credit with a mortgage broker and a few minutes 
later get approval. These people do not know us, they have never seen 
us, and yet they have the information they need to make an objective 
and sound credit-granting decision.
  When I was growing up, if you needed a loan, you had to walk down the 
street to the local banker, who had probably known you your whole life. 
He lent you money because he knew your family, he knew you were a hard 
worker, and he trusted you to make a good loan. Or maybe because the 
banker had certain preconceived notions about you or your family, you 
did not get credit that you deserved.
  Today, that has all changed. Today, the national marketplace for 
credit has transformed this loan-granting process. Uniform credit 
information allows lenders, big or small, to make sound lending 
decisions based on an objective evaluation of past credit performance. 
These objective indicators are critical to the safety and soundness of 
our financial institutions.
  Poor lending decisions affect all of us through institutional 
instability and an increased cost of credit.
  The FCRA, which was passed in 1970 and amended in 1996, has created a 
national credit marketplace based on standardized information related 
to consumer credit histories for all of us, regardless from which state 
we come. That same statute has standardized consumer rights related to 
accuracy and access. And the reason we are here today on the floor of 
the Senate is to improve and to protect this system.
  Unless Congress acts, important preemption provisions of the FCRA 
will expire on January 1, 2004. Under the pressure of that deadline, 
Banking Committee Chairman Shelby and Ranking Member Sarbanes have done 
an extraordinary job of creating an exhaustive hearing record on this 
law, and putting together a bill that both enhances the underlying 
statute and also permanently extends the preemption provisions to 
guarantee uniformity, to the benefit of consumers and businesses alike. 
When I introduced the first reauthorization bill, S. 660, back in 
March, I had no idea the process would move forward with such 
bipartisan spirit, with unanimous approval from the Senate Banking 
Committee, and a 392-30 vote out of the House. But these votes are 
testament to the critical importance: the urgency of this legislation.
  The United States is unique in having what is known as ``full file'' 
credit reporting. Unlike in other countries, where only consumers with 
negative credit history have any kind of record, our system encourages 
data furnishers to report both negative and positive credit history--
all on a voluntary basis. This information allows lenders to make 
informed decisions about a given consumers credit risk, and to make 
better, safer, and more objective lending decisions.
  This means that when you pay on time, this positive payment history 
gets reported to centralized credit bureaus. Of course, of you're late 
or you miss payments, that information goes into your file as well. But 
unlike the ``no news is good news'' system that exists in so many 
countries, our full-file reporting system means that consumers can 
build up a solid credit history through on-time and responsible 
payments, and that history will follow us wherever we go. So when the 
time comes to apply for a mortgage or other loan, a lender can see that 
you know how to handle your finances.
  This full-file reporting system has led to another critical 
development in our credit markets, and that is risk-based pricing. 
Until fairly recently, credit granting was a binary business. In other 
words, either you qualified for credit or you didn't. Now, lenders can 
take a chance on a borrower by charging a higher interest rate to 
account for that risk instead of simply rejecting a loan application. 
This type of pricing has helped to fuel America's small businesses. It 
has also helped those with impaired credit histories or with little 
history at all to enter the mainstream credit markets, opening up new 
opportunities.
  I would like to spend just a few minutes highlighting the magnitude 
of what's at stake today with some statistics.
  A recent study of the consumer credit marketplace shows the growth of 
credit card access over the last 30 years, and the results are 
striking. In 1970, only 2 percent of families in the lowest income 
bracket had a credit card. In 2001, that number stood at 38 percent. In 
the highest bracket, the 33 percent of households that had at least one 
credit card in 1970 had risen to 95 percent.
  Even more striking are the statistics related to access to credit by 
race. Between 1983 and 2001, the number of white families who held 
credit cards increased by 69 percent. During the same period, the 
number of Hispanic families increased by 85 percent, and the number of 
African-American families increased by 137 percent.
  It is worth noting the significance of these figures extends far 
beyond simple borrowing power. Today, you can't rent a car without a 
credit card. You can't buy movie tickets over the phone without a 
credit card. And with only a few exceptions, you can't shop on the 
Internet without a credit card.

[[Page 26896]]

  The results are just as noteworthy in the area of mortgage lending. 
Over the last three decades, white non-Hispanic families experienced a 
20 percent increase in access to mortgage loans, while minority groups 
experienced a 65 percent increase over the same period. Those rates 
coincided, not surprisingly, with a parallel increase in homeownership 
rates. I think we all understand the important social and economic 
benefits of homeownership.
  The study also notes the critical role that automated underwriting 
has played in democratizing our credit markets. Automated underwriting, 
which would be next-to-impossible without a uniform national credit 
standard, now accounts for over 90 percent of mortgage lending, up from 
25 percent in 1996. According to this report, and this is an 
astonishing statistic:

       Before the advent of automated underwriting, approving a 
     loan application took close to three weeks; in 2002, over 75% 
     of all loan applications received approval in two or three 
     minutes.

  Even more important, the automated underwriting systems greatly 
reduce racial and gender bias that in the past resulted in redlining, 
which unfairly prevented certain groups from owning homes, and which 
kept too many financial services companies out of markets inaccurately 
and unfairly deemed to be high risk.
  This study also concludes that certain changes to FCRA, and in 
particular restrictions on the type of data that might be reported 
about a consumer, would be especially harmful to consumers at the lower 
end of the credit spectrum. In particular, minority, lower-income and 
younger borrowers would be the hardest hit. This conclusion is 
critical, and gets to the heart of what a uniform national credit 
reporting system is about. The last thing we want is to reintroduce 
discrimination into the lending system, which would mean that 
minorities and low-income people would be forced to high-cost 
unregulated lenders for credit.
  Failure to maintain a uniform national standard would also have a 
staggering impact on the cost of credit. Even credit cards, which often 
carry higher interest rates than other types of non-revolving lines, 
have seen significant decreases in cost, which the study attributes 
largely to the competition in the market and to prescreening, which is 
made possible on a large-scale basis by the FCRA. For example, in 1990, 
only 6 percent of all credit card balances paid interest rates under 
16.5 percent. By 2002, 15 percent of all card balances paid rates below 
5.5 percent, and 71 percent of all credit card balances carried 
interest rates under 16.5 percent. In 1990, while more than 93 percent 
of all credit card balances paid interest rates over 16.5 percent, that 
number had plummeted to 29 percent in 2002.
  I note here that consumers who do wish to receive pre-screened offers 
have the right to opt out of the system. In fact, S. 1753 makes that 
opt-out even easier and long-lasting.
  While some of these interest rate declines may be due to a general 
drop in interest rates, much absolutely has to do with companies' 
ability to differentiate risk among borrowers and to price credit 
accordingly. Credit scoring models have increased in their predictive 
power and one result is increasingly competitive cost of credit. Any 
reduction in the type of information available to lenders would 
significantly degrade the predictive power of most models.
  The study further indicates an increasingly efficient marketplace, 
leaving aside the role of interest rates. One chart shows mortgage 
rates back in the early 1980s hovering around 3.5 percentage points 
above the 10-year Treasury bill. In the last few years, spreads have 
closed to about 2.5 percentage points. The national credit marketplace 
has increased competition, with all the positive effects we learned in 
Economics 101. One of the main reasons we have a competitive national 
marketplace is because we have a national credit reporting standard 
that permits consumers, no matter where they live, no matter where they 
move, to apply for credit and to receive an answer in a matter of 
minutes. America is the envy of the world in terms of immediate access 
to credit for all of our citizens.
  There are ongoing attempts to mischaracterize the fundamental nature 
of the FCRA as a privacy statute. And while there are certainly 
important privacy components to this statute, components which the 
Banking Committee bill strengthens significantly, the FCRA 
fundamentally is about the economy. And all too many of us know 
firsthand that the last thing our economy needs now is an attack on the 
consumer credit markets.
  Under the able leadership of Senators Shelby and Sarbanes, the 
Banking Committee's bipartisan legislation takes groundbreaking new 
steps to give consumers greater control over their financial lives; 
fight the growing crime of identity theft; and promote much needed 
financial literacy and education efforts. Under the act, every American 
will be able to get one free credit report a year--a significant 
milestone. The public will also know that their private medical 
information will never be used inappropriately in making credit-
granting decisions. And the act takes important new steps to empower 
consumers to reduce unwanted credit solicitations.
  It is my understanding that some Members may be offering amendments 
that include wholesale replacement of significant portions of this 
carefully-crafted bill with a substitute proposal that has moved 
through a State legislature under a highly charged and political 
atmosphere. While I look forward to discussing these proposals, I am 
frankly very concerned that we not get into a situation where we are 
playing politics with access to credit. One of these amendments in 
particular is drafted in such a way that we would end up catching labor 
unions, churches, universities, charities, and a host of other groups 
in the FCRA net, a consequence that is clearly unacceptable.
  As we move forward with this legislation to strengthen and protect 
our consumer credit markets,I would urge my Senate colleagues to look 
to the model of bipartisan lawmaking that has surrounded 
reauthorization of key provisions of the Fair Credit Reporting Act: a 
unanimous vote out of the Banking Committee and an overwhelming House 
vote of 392-30 on final passage. We owe it to our constituents to 
continue working together to secure final passage of this critical 
economic bill. I urge my colleagues to join me in supporting this 
legislation, which is so important to America's consumers and 
businesses alike.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mr. SUNUNU. Mr. President, I rise in support of the Fair Credit 
Reporting Act which we are debating on the floor today. I think it is 
important as we move through this debate and take up amendments to the 
legislation that we continue to ask the question, Why do we need this 
legislation in the first place? What are we trying to accomplish with 
the bill?
  First and foremost, this is legislation that is intended to serve and 
protect the interests of consumers in the United States of America. In 
this legislation we are providing consumers access to a national credit 
system. If we look at the financial services, or our commerce system 
across the entire country, it is our job to look out for the interests 
of consumers where interstate commerce and business is concerned, and 
this legislation does just that. It provides access to a national 
credit system, and it does so at a reasonable cost. We strike a balance 
between the needs of the consumers and the impact on our economy so 
that in the long run both consumers and America's economy are well 
served.
  We work to ensure consistency and fairness in the legislation. Any 
bill we take up here which might affect consumers or any other 
interests in the country, we would want to work to ensure it is 
consistent, it is fair, and that it creates a level playing field 
wherever possible.
  As indicated and described by Senator Johnson in his remarks, the 
existence of this national credit system has resulted in speedy 
approval for consumer decisions and requests and credit cards and other 
financing mechanisms. As a result, we have seen access

[[Page 26897]]

to credit dramatically increase since 1970 when the first credit acts 
were signed into law.
  That improvement in access to credit markets and credit opportunities 
has been most dramatic for those at the lowest end of the income 
ladder. That is something we should recognize as being good for all of 
those consumers but also for our country as well. The reason we are 
here is for those consumers.
  If we look at the result of the work that was done beginning in 1970, 
the Credit Reporting Act in 1996, and now with this legislation to 
reauthorize that legislation, the results have been a more accurate 
system, a stronger economy as described in detail by a number of the 
previous speakers, and now with some of the new provisions we will also 
have greater protection from identity theft and a system that is 
adapted and modernized to meet the new technologies and the new 
opportunities that exist today.
  Senator Sarbanes described the details of the legislation. I will not 
go through all of the provisions that enable us to enjoy these very 
positive results, but I will reemphasize the fact that this is strong 
bipartisan legislation. Chairman Shelby and ranking member Sarbanes 
worked through six hearings in our committee to conduct exhaustive 
investigation as to the results of the legislation that has been 
enacted before, the new opportunities created by technology, and 
different opinions on different provisions. We have a very strong 
committee record. I am pleased to have participated in most of those 
hearings to ensure that we are taking the disparate views into 
consideration and improving the strong legislation that is already on 
the books.
  We want to avoid having 50 States adopting 50 different standards in 
each of the areas that have been discussed--whether it is enforcement, 
access for consumers to credit reports, information sharing, or 
whatever the issue. We don't want to have 50 different systems for each 
of these areas. That would be a more costly system for consumers. That 
would mean we would have a less accurate system. That would also mean--
I think this is an important point--we would come back to this debate 
with a disparate patchwork, and it would also mean greater 
susceptibility to identity theft.
  When we are looking at the issue of information sharing or opt-ins 
and opt-outs, some of the privacy issues that are very important, we 
have to be sure we at least give law enforcement the same level playing 
field criminals have in that we at least ensure law enforcement has the 
most consistent system possible to do its job in protecting against 
identity theft. A patchwork of laws and legislation would increase the 
risk of identity theft, not decrease it.
  At the end of the day, this is a consumers' bill. That is exactly 
what we want it to be. We give consumers greater access to reports. We 
have all been frustrated with mistakes, or errors, or oversights in our 
own credit reports. We want to make sure consumers have that access. We 
give them the protection from identity theft. We improve the 
enforcement mechanism for those who commit crimes involving credit 
reporting or identity theft. We have very commonsense provisions for 
information sharing among affiliates that exist so they can make sure 
the information they are acting on is accurate and fair and adequately 
represents the consumers' interests in these.
  Again, I give great credit to the staff of the committee and to the 
chairman and ranking member for the work they have done.
  I look forward to this debate. I hope we can quickly conclude the 
work on this legislation so our national credit system can remain 
strong as it has been for decades, but also so it can be improved to 
respond to what is in a changing world.
  Mr. BUNNING. Mr. President, I rise today in support of S. 1753, the 
National Consumer Credit Reporting System Improvement Act of 2003.
  As we all know, reauthorization of the Fair Credit Reporting Act is a 
very important issue for the financial services industry and for 
consumers.
  When I talk to my friends in this sector, it is always the first 
thing they ask about. It touches everyone and their money and our 
national economy. It's critical that we act on it before adjournment.
  I believe that the Banking Committee, under the leadership of 
Chairman Shelby, has created a fair, bipartisan bill, and I urge my 
colleagues go support it.
  We have been talking about this issue for several years. We have held 
a number of hearings on it. We looked it over pretty thoroughly, and I 
think we have come up with a reasonable approach.
  Most importantly, we have to act now because this bill is also 
important to our overall economy.
  Last week, we had great economic news. Our economy is roaring back 
and that is good news for everyone. But if we fail to pass this bill, 
it could end up being a serious speed bump on the road to a better 
economy.
  If there is one thing that markets hate, it is uncertainty. They want 
to know where we are and where we are going.
  For better or worse, the markets think we are going to pass this 
bill.
  They think we are going to outline a stable path for financial 
institutions when it comes to the sharing of information.
  Any talk or any sign from Congress that makes the markets think that 
we are not going to pass this bill would create a great deal of 
uncertainty in the financial markets.
  Now that our economy is really coming to life, that is the last thing 
we need.
  If the markets think we are going to let the FCRA lapse, they are 
going to get very jittery very quickly. I can understand that. This is 
a sensitive, complicated area. I don't think any of us wants the FCRA 
to lapse.
  We need Federal preemption in this area. I think it would be a 
mistake to let States and localities all try to impose their own 
privacy rules.
  There are trillions of dollars at stake. We have to be very careful.
  But if we fail to pass this bill, we open a Pandora's box of States 
and localities writing their own rules, and the markets and financial 
institutions just are not prepared for that.
  We can't let that happen. We don't need that uncertainty now. Who 
knows what would happen.
  On a personal note, I am very pleased that the bill contains strong 
identity theft and privacy protections, including my amendment on 
social security number truncation that will help prevent thieves who go 
``dumpster diving'' or try to steal credit reports from mail boxes.
  Identity theft is a growing problem in America. The internet is 
making it easier for thieves to access consumer information.
  My amendment will help fight this growing menace. Under this bill, 
consumers can block out their social security number on their credit 
reports.
  It's just the sort of simple, commonsense approach that will help 
consumers without burdening business.
  I would also like to talk about the amendments that are going to be 
offered by my colleagues from California. They are based, in large 
part, on a California bill, SB1.
  I am sure California has a fine legislature. And I am sure there 
representatives try their best to represent their California 
constituents. But I do not think the California Legislature represents 
the people of Kentucky or the other States very well. That's not their 
job.
  If we adopt the amendments to be offered by my friends, it would have 
the effect of imposing California's rules on the rest of the Nation.
  That's a bad idea that will only lead to the economic uncertainty we 
have to avoid.
  If California wants to try to craft their own rules and work with 
Federal regulators, I say more power to them--but not if it puts a 
crimp on the national economy or starts rewriting the rules for the 
other 49 States.
  Our credit system is a national system and it needs a national 
standard. Standards that may work in California or Kentucky may not 
work for the country as a whole.

[[Page 26898]]

  Usually I am all for taking power away from Washington and sending it 
back to the States and local government. But on this bill, we cannot 
ignore the fact that credit rules and markets and money are all part of 
a broader, national economy that requires a unified, Federal approach. 
To let States undermine that would be a recipe for disaster.
  S. 1739 is a fair and balanced bill that sets a fair and balanced 
standard for our entire Nation.
  It's bipartisan, it's common sense, and it's a prudent solution to a 
pressing problem for our financial institutions.
  I urge my colleagues to support this important legislation.
  Mr. SCHUMER. I commend Senators Shelby and Sarbanes on a strong, 
bipartisan bill.
  Reauthorizing the Fair Credit Reporting Act is vital to our national 
credit markets, to the broad credit access American consumers enjoy, 
and to the businesses that provide that credit. Indeed, it may be the 
most important piece of legislation that we enact in 2003.
  Like all great pieces of legislation, this bill strikes a balance 
between those who would like to see more change and those who would 
like to see less. It is a true compromise between competing interests.
  While preserving some of the structure of how businesses operate, it 
adds significant new consumer protections and disclosure rights--
enhanced protection from identity theft, distribution of free credit 
reports annually, better notice when adverse actions are taken.
  I want to speak for a minute about identity theft.
  While our national credit system--and the digital age we now live 
in--has brought great benefits, it also has a dark underside: identity 
theft.
  It is now so easy for credit histories to be accessed, that the 
security of some of our most private data is easily compromised. As a 
result, becoming a victim of identity theft is as easy as saying your 
ABCs.
  So what is identity theft? It sounds like something out of an Isaac 
Asimov science fiction novel but it is a very real crime that could 
affect all of us. Anyone who has ever applied for a credit card, a 
driver's license, a social security number, even a cell phone, could 
become a victim.
  Last year, the Federal Trade Commission received twice as many 
complaints about identity theft as it did in 2001. And ID theft is 
projected to grow in the future. Some forecasts predict that by 2006, 
between 500,000 and 700,000 Americans will be victimized annually.
  This issue is of particular concern to New York State. New York has 
the second highest number of cases of ID theft of any state in the 
county. And my hometown, New York City, has the unfortunate distinction 
of being the identity theft capital of the United States--it suffers 
more identity theft than any other city in the nation. New York 
businesses also suffer as the financial costs of identity theft 
nationwide often fall on the financial institutions based in New York. 
ID theft costs businesses millions of dollars each year because 
criminals use false pretenses to purchase goods, leaving businesses to 
foot the bill. Identity theft is a scourge on New York consumers and 
New York businesses. And it is high time we fixed this problem.
  Victims of identity theft often spend hundreds if not thousands of 
dollars and years repairing their financial lives. But there is more at 
stake here than just money. By destroying a person's credit rating, 
identity theft jeopardizes an honest person's ability to get a credit 
card, receive approval for a loan, get a job, or even buy a house.
  Identity theft doesn't just mean having to replace an ATM card, it 
means having to rebuild a life.
  So I am glad we are addressing ID theft in a strong manner in this 
bill and commend my colleagues for their leadership on this issue.
  I also want to speak about another critical part of the bill--
improving consumer access to their credit scores, the principle factor 
in determining a person's credit worthiness and the loan terms they 
receive. For years, consumers have been kept in the dark about what 
their credit score is and how it is computed. At long last, this 
legislation lifts the veil of secrecy over credit scores and creates 
greater opportunity for securing a home mortgage at considerably less 
expense.
  The legislation that Senator Allard and I worked on with our Chairman 
and ranking member will finally put an end to this practice by ensuring 
that consumers have access to their credit score. This will level the 
information playing field between consumers and lenders.
  Specifically, S. 1753 would require credit bureaus to disclose a 
consumer's credit score upon application for a mortgage. The bill also 
would require any bank using a credit score to service a mortgage to 
provide the borrower with the information used to create this credit 
score. And the credit score, whether obtained from a credit bureau, 
generated internally by the lender, or created by a third party, would 
have to be accompanied by a description of credit scores and the data 
used to generate them. This will go a long way toward demystifying 
credit scores for consumers. I think it is a real victory for 
consumers. And, again, I am proud to have worked with my colleague 
Senator Allard on this section of the bill.
  So in conclusion let me say that I think the bill maintains the key 
foundation of the national credit system which has served consumers and 
the country so well--the ability to get instant credit, to get world 
class customer service, and to get some of the lowest credit rates in 
the world. And it enhances some of the new rights consumers need in 
this digital age we now live in.
  Mr. CORZINE. Mr. President, I rise in support of the legislation 
currently being considered, ``The National Consumer Credit Reporting 
System Improvement Act of 2003.''
  Before I get into the substance of the legislation, I would like to 
acknowledge the stewardship and leadership of Banking Committee 
Chairman Shelby and Ranking Member Sarbanes in developing this 
bipartisan proposal--which passed unanimously out of the Senate Banking 
Committee. Their efforts, and the work of their respective staff, are 
to be commended.
  Through a series of six hearings they took a thoughtful, deliberative 
approach toward the myriad issues involved in fashioning this 
legislative proposal. In those hearings we heard from a variety of 
sources--regulators, industry participants, consumer advocates, and 
most importantly consumers themselves. Those hearings proved an 
invaluable tutorial to me and I imagine all the other members of the 
Banking Committee. More importantly, those efforts, and the comity 
shown by Senator Shelby, created an environment of bipartisanship in 
the effort to enhance our national consumer credit reporting system--
which is embodied in the bill now before the full Senate.
  The Fair Credit Report Act has been central to the provision of 
credit in America. It has improved access to credit, and enhanced the 
security and accuracy of consumer financial information used in 
assessing creditworthiness. The expansion of our credit system, which 
the FCRA has helped drive, has proved enormously beneficial to our 
nation and our economy. It provides consumers with the ability to 
finance purchases of a car, pay a child's college tuition, purchase a 
new home, open up a new business or pursue some other lifelong dream.
  Credit is the grease that makes the wheels of the economy turn--
particularly our consumer-oriented economy which accounts for nearly 10 
percent of our overall GDP. And the FCRA has provided millions more 
Americans, many of whom lacked the financial resources to pursue their 
dreams and those who historically have been shut out, with access to 
our credit system--particularly minority and low-income households.
  But we should not lose sight of the fact there's a great deal more 
that we can do before we claim that the playing field is truly level. 
With several of its provisions set to expire at the end of this year, 
it is imperative that Congress act now to reauthorize the FCRA,

[[Page 26899]]

lest we risk a severe disruption to our economy that could result from 
a breakdown in our national credit system.
  This legislation does that. In fact, it does more than just 
reauthorize the FCRA--a worthy objective in its own right. It enhances 
the obligations of those who use and store consumer credit information, 
it strengthens consumer control over their personal financial and 
medical information, it strengthens consumer protections against 
identity theft, and importantly it promotes consumer financial 
literacy. And this legislation includes important provisions that will 
strengthen consumer protections against the serious, and growing, 
threat of identity theft.
  It's a serious crime and is rapidly becoming an epidemic. In fact, 
identity theft is the single largest consumer crime in America, as 
reported by the Federal Trade Commission. People whose identities have 
been stolen can spend months or years, at considerable cost, cleaning 
up the mess thieves have made of their good name and credit record. And 
while doing so, victims lose employment opportunities, can be refused 
loans, education, or even be arrested for crimes they didn't commit.
  This bill directs federal banking regulators to develop guidelines 
and regulations to fight identity theft. It allows consumers who have, 
or may have, been a victim of identity theft to put banks and others on 
notice to guard against the continued use of their stolen identity 
through the use of ``fraud alerts.'' It prohibits debts resulting from 
identity theft from being sold or transferred for collection, and it 
enhances criminal penalties for identity theft. It requires financial 
institutions to disclose when their customer data systems have been 
compromised. And the bill provides consumers with access to one free 
credit report per year from the credit reporting bureaus.
  This access will allow consumers to monitor the accuracy of the 
information contained in their credit files and ensure that information 
resulting from identity theft does not end up destroying their 
financial reputation. These are all important provisions, and they are 
sorely needed.
  I also want to speak to an element of this bill that has received 
little public attention, but will, I believe, be particularly 
beneficial in the long run--that is the provisions of the bill which 
promote consumer financial literacy. The Chairman and Ranking Member of 
the Banking Committee noted the importance of the financial literacy 
provisions in their opening statements. They, and others, including 
Senators Stabenow, Akaka and Enzi, deserve recognition for their 
commitment to improving the financial literacy of Americans young and 
old.
  This bill seeks to harmonize the currently fragmented approach the 
federal government has taken towards promoting financial literacy. It 
establishes a Financial Literacy and Education Commission to streamline 
and improve financial literacy and education programs of the Federal 
Government, including curriculum development, for the benefits of all 
Americans.
  And by providing consumers with a free credit report, and access to 
the information used by creditors to judge their creditworthiness, this 
bill equips consumers with the tools to competitively shop for sources 
of financing and will lead consumers to make better informed, more 
judicious, credit-related decisions. And, I might add, improved 
financial literacy will also help consumers protect themselves against 
identity theft.
  The various elements of this legislative proposal that I've just 
outlined will prove beneficial to consumers, our credit system and our 
economy. It's a bipartisan bill that does a lot of very good things, 
and was put together in a balanced manner. Is it a good piece of 
legislation? Yes. Is it perfect to me? Certainly not. I personally 
think more can be done to give consumers greater control over the ways 
in which financial institutions share their personal information with 
their affiliates, for marketing, solicitations and other purposes. And 
I think we will need to revisit FCRA at some point to look at issues 
related to the increased use of credit scores as a determinant of one's 
suitability to gain employment, obtain car or medical insurance or rent 
an apartment.
  In that regard, I want to thank Chairman Shelby for graciously 
incorporating into this bill language I offered in committee that calls 
for a study of the impact credit scores and credit-based insurance 
score have on the availability and affordability of financial products 
so that we can explore this issue more broadly as we move forward.
  But whatever issues I, or other members, may wish to raise with 
regard to S. 1753, there is no doubt that this legislation makes 
significant improvements to current accuracy and security standards of 
our consumer credit reporting system and our efforts to fight identity 
theft.
  The standards contained in the legislation will make our credit 
system more robust and provide access to credit to even more Americans 
who seek it. In doing so, this legislation will prove beneficial not 
only to consumers, but also more broadly to our nation's economy.
  I urge my colleagues to support S. 1753 when it comes up for final 
passage.
  Mr. REED. Mr. President, I rise today in support of the National 
Consumer Credit Reporting System Improvement Act of 2003, which would 
reauthorize expiring provisions of the Fair Credit Reporting Act. I 
commend Senator Shelby and Senator Sarbanes for their hard work in 
addressing this issue and for putting forward a bipartisan bill to 
strengthen our Nation's credit system. The Banking Committee has held 
numerous hearings on all aspects of this issue over the past year that 
have highlighted the concerns of consumers, regulators, and private 
companies.
  One of the cornerstones of our national economy is consumer access to 
credit. Access to credit allows for smooth functioning of our national 
economy with consumers able to get loans for homes, cars, and 
commercial purchases.
  This is all made possible by having a national credit system, as 
first put into place by the Fair Credit Reporting Act in 1970, and then 
standardized by the 1996 amendments to the act. Uniform national 
standards have improved the efficiency of the system by reducing the 
regulatory burden on lenders, thereby allowing them to pass on better 
service and lower costs to consumers. Automated underwriting systems 
translate to quicker credit decisions and more convenience for 
borrowers and lenders alike, while making risk-based decisions more 
accurate.
  Failure to reauthorize national standards would balkanize our 
national credit system and potentially hurt every consumer in America. 
The Banking Committee recognized this and voted unanimously to report 
S. 1753.
  This important legislation includes numerous consumer protections 
against identity theft. I am alarmed by the abuses that have resulted 
in identity theft. With more and more financial and personal 
information being exchanged through electronic channels, there is an 
inevitable trade-off--sensitive information can fall into the wrong 
hands.
  Over the past several years, identity theft has become a significant 
problem in the United States. According to a recent survey by the 
Federal Trade Commission, 9.9 million Americans were victims of 
identity theft in 2002, at a tremendous cost to consumer victims of $5 
billion in out-of-pocket expenses and $48 billion in losses to business 
and financial institutions. Indeed, complaints to the FTC about 
identity theft have nearly doubled every year for the past 5 years.
  By its very nature, this challenge requires coordination between the 
public and private sectors and between local, State, and Federal 
government. Identity theft is costly to consumers, costing New England 
alone over $44 million in 2001. The impact on private financial 
institutions should be no less obvious, and these companies are 
essential to any attempts at prevention and consequence management.
  S. 1753 represents a major step in this public-private effort to 
combat identity theft. Among many provisions, it

[[Page 26900]]

would allow victims of identity theft to place fraud alerts in their 
credit reports, block fraudulent transactions from being reported, and 
prevent false information from ``repolluting'' credit reports in the 
future. It would require businesses to truncate credit and debit card 
account numbers on printed receipts. And it empowers consumers to 
ensure the accuracy of their own credit history by granting them a free 
annual credit report from national credit reporting agencies.
  These are good steps. However, I believe that S. 1753 can be improved 
to address several other closely related consumer and privacy issues. 
We are seeing an increasing number of successful breaches of security 
at banks and processing companies, and we should address this trend 
head on in this debate. Just this past February, a computer hacker 
accessed 10.2 million credit card and debit card account numbers by 
breaking into a database maintained by a third-party transaction 
processor. This was the biggest credit card security breach ever in 
terms of the number of cards affected.
  Citizens Bank, located in my home State of Rhode Island, felt that 
this breach posed a significant enough risk to cancel the debit cards 
of nearly 8,800 customers and issue them new cards. I applauded this 
quick effort to protect consumers. Unfortunately, not every bank 
matched Citizen's level of consumer care, and many decided that the 
cost of reissuing cards or informing their customers exceeded the risk 
to consumers.
  In light of this less than comprehensive response, I would like to 
highlight one particularly troubling practice during this incident. 
According to media reports, even though some credit card issuers 
learned of the database intrusion early in February, they waited 
several weeks before disclosing the incident. Even with the zero-
liability policies for the vast majority of major credit cards, debit 
card holders could see their bank accounts depleted, and all affected 
customers still run the risk of being victims of identity theft, even 
months or years after the security breach occurred.
  Senator Corzine has introduced an amendment that would require 
financial institutions, creditors, and users of credit reports to 
notify the FTC when the security of consumer financial information is 
accessed in an unauthorized manner. A mandatory and timely disclosure 
of such breaches will allow the Federal Government, along with the 
institutions and consumers, to closely monitor transaction information 
and mitigate the resulting damage from the breach.
  An amendment from Senators Cantwell and Enzi would further enhance 
these identity theft provisions with language from a bill passed 
unanimously by the Senate last year. Their amendment would establish a 
single uniform procedure for individuals to establish that they are 
victims of identity theft, requiring a notarized FTC affidavit, a 
government identification, and a police report. It then gives these 
victims access to any business records related to their identity theft-
related fraud, which today is a time-consuming and difficult task.
  I would also be remiss if I did not address the much broader topic of 
privacy, a topic that is one of the most important issues to the 
American public. Privacy is important to Americans, as evinced by the 
overwhelming outpour of support for the national do-not-call registry, 
financial privacy legislation in California, and the Senate's unanimous 
vote against email spam. Indeed, Supreme Court Justice Louis Brandeis 
championed the right to privacy, calling it ``the right to be let 
alone, the right most valued by a civilized people.'' I believe that we 
must continue the privacy debate that we began with the Gramm-Leach-
Bliley Act and find the appropriate balance between consumers' privacy 
and the efficient operations of financial institutions.
  I commend Senators Shelby and Sarbanes for including a targeted opt-
out for affiliate sharing for marketing purposes in this bill, but I am 
not convinced that this step is sufficient. When Congress passed the 
amendments to the Fair Credit Reporting Act in 1996, affiliate sharing 
had a very different meaning. The Gramm-Leach-Bliley Act had not yet 
been passed, and massive financial services holding companies had not 
emerged. Today, according to the Federal Reserve's National Information 
Center, the largest bank holding company has at least 1639 affiliates 
as of June 30, 2003. The meaning of affiliate sharing has changed, and 
will likely continue to change as the financial services industry 
adapts to changing times.
  In its report to Congress on the economics of financial privacy, the 
Congressional Research Service argues that in a world with imperfect 
information, financial institutions would have an incentive to offer 
some compensation to their customers if they had to obtain their 
consent to use and share their information. The CRS report makes a good 
point. Consumers' financial information is inherently valuable, and 
they should have the right to prevent it from being shared for 
marketing or other profitable purposes. Indeed, as personal financial 
information gets passed from affiliate to affiliate and is handled by 
an increasing number of people, consumers will be placed at a higher 
risk of becoming victims of identity theft. The choice of how that 
information is spread should ultimately be theirs.
  Senators Feinstein and Boxer have put forward a reasonable compromise 
on the matter of privacy and affiliate sharing. This amendment on 
affiliate sharing was drawn from the California Financial Information 
Privacy Act, which was negotiated over the course of four years with 
industry and consumer representatives. There is no reason for me to 
believe that the situation has changed dramatically since the 
interested parties supported that legislation.
  Finally, I would like to speak in support of one of Senator 
Feinstein's other amendments on medical information. Even more than 
financial data, health-care related information should enjoy a special 
protection so that individuals will feel free to seek appropriate 
medical interventions and share all pertinent information with their 
doctors. Senator Feinstein's amendment would fix the definition of 
medical information in S. 1753 to include mental and behavioral health 
information and health-related information that was collected for other 
purposes like for worker's compensation or casualty and property 
insurance.
  As we debate S. 1753 and vote to strengthen our Nation's national 
credit system, we must renew our commitment to working to ensure 
consumer privacy amidst changing practices and standards in the market. 
With this in mind, I urge all of my colleagues to support this 
important bill.
  Mr. ENZI. Mr. President, the bill we have before the Senate, the 
National Consumer Credit Reporting System Improvement Act of 2003, is 
clearly a bipartisan effort recognizing that our credit system has 
truly developed into a national market. The bill will provide consumers 
with greater tools to improve the accuracy and correctness of 
information contained in their credit reports as well as to provide 
important tools for consumers in combating identity theft. This bill is 
a very proconsumer bill and goes a long way towards enhancing consumer 
protections in our credit markets.
  When the Fair Credit Reporting Act was first adopted in 1970, 
consumers spending had reached 566 billion dollars. At the time, that 
was quite an outstanding figure. By 2002, that figure had risen to over 
$7 trillion.
  In just this past decade alone, we have seen tremendous growth in the 
availability of credit. Much of this can be attributed to the 
technological advances in the way consumers can apply for credit, the 
review of credit applications by financial institutions, and the 
development of new and unique financial products. The incredible growth 
in the availability of credit in the housing, consumer, and small 
business markets is a testament to our financial markets. Accordingly, 
it also is a symbol of the national structure of our credit markets. I 
believe that this bill will further enhance the credit markets and 
provide significant consumer protections.

[[Page 26901]]

  Two areas that I would like to focus on are financial literacy and 
identity theft.
  With respect to financial literacy, I have witnessed how financial 
literacy programs can make a difference for individuals who wish to, 
but never thought they could, purchase a home. In Wyoming, I have 
worked with a consortium of financial institutions, real estate 
professionals, colleges and universities, and non-profits to provide 
compressed video classes on how to buy a home. These classes have 
proven to be vital in reaching home-buyers and families in the rural 
areas of the State. To date, more than 4,000 families and individuals 
have taken part in the classes. The great success of this program has 
demonstrated to me the power that we can give to individuals and 
families over their finances if we gave them the tools.
  In addition, I also worked with consumer credit counseling services 
that helped over-extended individuals and families to rearrange their 
life and breakout of debt. Credible advice makes a difference for 
financial power.
  The Federal Government has a vast variety of financial literacy and 
education programs for Americans of all ages. Unfortunately, consumers 
have to struggle through the many Federal agencies' programs and 
initiatives to find the right financial literacy material for their 
needs. Title V of this bill will provide a one-stop-shop for consumers 
to reach the many, various financial literacy programs that the Federal 
Government provides. In addition, the Title will help bring consistency 
and focus to the Federal Government's overall financial literacy 
goals--something that does not appear apparent at this time.
  Title V is built upon the successful model of the Trade Promotion 
Coordinating Committee in that it would being the appropriate Federal 
agencies together to review and evaluate current financial literacy 
programs by the Federal Government. The Financial Literacy and 
Education Commission will make recommendations on how to coordinate and 
improve existing programs as well as how to reduce redundant and 
duplicative programs. I believe that the long-term cost savings to the 
Federal Government as a result of this review will be great. In 
addition, the commission will set forth a national strategy 
recommending changes to the President and Congress on how the Federal 
agencies can improve their financial literacy efforts.
  I thank Chairman Shelby for incorporating the bipartisan effort to 
promote financial literacy as Title V of the bill. In addition, I thank 
Senators Sarbanes and Stabenow as well as the other members who 
supported this effort.
  With respect to identity theft, the FTC recently released a study 
showing that more than 27.3 million consumers have been a victim of 
identity theft in the past five years and that the number is growing 
quickly. A little more than a month ago, one of my own staff became a 
victim of this crime. As you know, Senator Cantwell and I have 
introduced identity theft legislation to help victims to recover their 
identities, that legislation passed the Senate last Congress.
  According to the Federal Trade Commission, identity theft is the 
fastest growing crime facing consumers today. Victims are faced with 
potential financial ruin when their identities, bank accounts, and 
credit histories are taken away from them by unscrupulous criminals.
  Unfortunately, many victims face an uphill battle to restore their 
identities. In addition, Federal and local law enforcement officials 
are placed at a disadvantage by not having all of the available 
information to discover identity theft rings or patterns of id theft 
criminals.
  I believe that the provisions in the bill before us take a great step 
in helping the victims of this crime recover as well as providing 
proactive tools to help consumers prevent their identities from being 
stolen. In addition, the bill will give greater significant to the 
Identity Theft Affidavit and to the collection of information to combat 
identity theft crimes.
  The National Consumer Credit Reporting System Improvement Act of 2003 
is one of the most important pieces of consumer legislation that we 
have seen in years. It is truly a bipartisan bill that will enhance the 
fundamental structure of our credit markets as well as providing 
consumers with the necessary tools to use the credit markets and to 
protect against identity theft. I urge my colleagues to pass quickly 
this very important piece of legislation.
  Mr. AKAKA. Mr. President, I rise to speak about an amendment that I 
have filed, but will not call up today in the interest of moving this 
legislation forward, with regard to Title V of S. 1753, the Fair Credit 
Reporting Act, FCRA, bill. I would like to thank my colleagues, 
Senators Sarbanes, Enzi, Stabenow, and Corzine, for their diligent work 
on Title V to establish a Financial Literacy and Education Commission. 
This commission will help tremendously toward coordinating the myriad 
efforts of Federal agencies to increase financial literacy in this 
country and creating a comprehensive national strategy as an important 
blueprint to follow.
  As a part of this effort, I believe its important to emphasize the 
need for public awareness about the importance of financial and 
economic literacy. My amendment is similar to a bill introduced in the 
other body by the gentleman from California, Representative David 
Dreier, and cosponsored by several colleagues on both sides of the 
aisle, that would establish a pilot national public service multimedia 
campaign to enhance the state of financial literacy in this country. It 
would authorize $3 million over 3 years for this purpose.
  My amendment differs in that it coordinates this public service 
multimedia campaign with the Federal Commission created by S. 1753 and 
the national strategy that would be produced by the commission. It 
would authorize the commission to work in collaboration with an entity 
accomplished in public service campaigns that has secured private 
sector funds to supplement federal funding and community organizations 
well-qualified by virtue of their experience in the field of financial 
literacy and education. My amendment also requires that performance 
measures be developed to measure the effectiveness of such a public 
service multimedia campaign, via positive changes in behavior with 
respect to personal finance. It is paramount to be able to assess the 
effectiveness of the campaign and other financial literacy efforts so 
that we understand what works and does not work, and can replicate our 
successes into the future.
  I will continue to work with my colleagues on the Banking Committee 
and their counterparts in the other body to include the language in my 
amendment in FCRA legislation during their negotiations following 
Senate passage of S. 1753. It is important that we continue our 
coordinated efforts to ensure that Americans are financially literate, 
which will encourage better decisionmaking by individuals, stronger 
families, better-functioning markets, and a more secure future for our 
Nation.
  The PRESIDING OFFICER. The Senator from California.


                           Amendment No. 2054

      (Purpose: To make an amendment regarding affiliate sharing)

  Mrs. FEINSTEIN. Mr. President, on behalf of Senator Boxer and myself, 
as well as Senators Harkin, Feingold, Durbin, Lautenberg, and Nelson, I 
send an amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from California, [Mrs. Feinstein], for herself, 
     and Mrs. Boxer, Mr. Harkin, Mr. Feingold, Mr. Durbin, Mr. 
     Lautenberg, and Mr. Nelson of Florida, proposes an amendment 
     numbered 2054.
  (The amendment is printed in today's Record under ``Text of 
Amendments.'')
  Mrs. FEINSTEIN. Mr. President, the bill before the Senate in its 
current form allows huge conglomerates, with just limited restrictions 
on marketing, to freely share vast quantities of personal customer 
information with commonly owned companies even if a consumer asks that 
the information not be shared.

[[Page 26902]]

  Let me list the types of information we believe could be shared among 
companies that have common ownership--called affiliates--under the 
bill: Information mined from your check and credit card payments such 
as your political or charitable contributions, your magazine 
subscriptions, your liquor purchases, the location and identity of 
stores you frequent; the stocks you own and stock trading patterns; the 
cash you have in the bank; when your certificates of deposit mature; 
how much you owe on a credit card and what rate you get; your insurance 
claims history such as whether you pay your premiums on time, how many 
claims you have made and whether claims were paid out; how many times a 
consumer called the company's call center or complained about the 
company's service; an employee's work history, including performance 
ratings, use of sick days, vacation, and salary.
  To make matters worse, the bill permanently preempts States from 
taking stronger action.
  What we have before the Senate today is a weak privacy standard built 
for businesses at the expense of consumers which legislatures in all 50 
States are forever barred from improving.
  I am particularly concerned that financial institutions in 
California, with the lone exception of the California Credit Union, 
negotiated and signed off on State legislation resolving this issue, 
and now the same financial institutions are trying to eliminate the 
California law with national legislation.
  I will spend just a moment on that because it is important. 
Essentially, the banks and financial institutions in California worked 
with the State legislature in crafting the Californlia law that has an 
opt-out for affiliate sharing. The reason they did so was because 
waiting in the wings was a well-funded initiative to pass an even 
stronger privacy law. They knew the people of California would pass 
that privacy law.
  Senator Jackie Speier, who was the author of the California privacy 
bill, has sent Senator Boxer and I a letter. I will read two paragraphs 
from the letter.
  ``It has recently come to my attention that the financial services 
industry has been criticizing the contents of your amendment to S. 
1753, substituting the newly-enacted and stronger California privacy 
standard on affiliate sharing in the `corporate family of companies,' 
as unworkable and unreasonable. This same industry recently called my 
California bill `workable and reasonable,' specifically removing their 
opposition to my measure and lavishing praise upon it, even helping to 
gather votes. Industry made it clear that my bill met their workability 
concerns, progress made with their active participation. If my bill was 
workable for industry in California, then why shouldn't it be the 
national standard?''
  ``One industry representative stood with me on that day and said my 
bill `encompasses all aspects of the workability needed to ensure 
protection of consumers' privacy,' while another called it `a balanced 
measure that will provide meaningful privacy protections to consumers 
while also addressing the workability concerns.' . . . Now the story is 
different, as industry sees a political opportunity to preempt 
California's standard on affiliate sharing with a weaker one.''
  I ask unanimous consent the entire letter be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                      California State Senate,

                                                 October 24, 2003.
     Hon. Dianne Feinstein,
     U.S. Senator, Hart Senate Office Building, Washington, DC.
     Hon. Barbara Boxer,
     U.S. Senator, Hart Senate Office Building, Washington, DC.
       Dear Senators Feinstein and Boxer, I wish to thank you for 
     your efforts on behalf of consumer privacy rights, and urge 
     you to continue to do all that is possible to protect 
     California's hard-fought consumer privacy gains.
       It has recently come to my attention that the financial 
     services industry has been criticizing the contents of your 
     amendment to S. 1753, substituting the newly-enacted and 
     stronger California privacy standard on affiliate sharing in 
     the ``corporate family of companies,'' as unworkable and 
     unreasonable. This same industry recently called my 
     California bill ``workable and reasonable,'' specifically 
     removing their opposition to my measure and lavishing praise 
     on it, even helping to gather votes. Industry made it clear 
     that my bill met their workability concerns, progress made 
     with their active participation. If my bill was workable for 
     industry in California, then why shouldn't it be the national 
     standard? A transcript of their August 14, 2003, public 
     comments bear this out and is attached.
       One industry representative stood with me on that day and 
     said my bill ``encompasses all aspects of the workability 
     needed to ensure protection of customers' privacy,'' while 
     another called it ``a balanced measure that will provide 
     meaningful privacy protections to consumers while also 
     addressing the workability concerns'' that industry had. Now 
     the story is different, as industry sees a political 
     opportunity to preempt California's standard on affiliate 
     sharing with a weaker one.
       The financial services industry appears to be acting in bad 
     faith--it seems willing to say and do anything to erode 
     California's recent progress on behalf of consumers, first to 
     avoid a costly initiative battle and local ordinances 
     limiting third-party sharing, now to pull the wool over 
     Congress' eyes. Does the financial services industry really 
     believe that millions of American consumers don't deserve a 
     choice over what happens when their personal financial 
     information, their financial DNA, is shared with thousands of 
     affiliated companies? The industry's position is flawed 
     public policy, weaker than their own standards abroad, and 
     the kind of business practice that erodes consumer 
     confidence.
       I urge you to continue your efforts in making California's 
     privacy standards those of the nation. California's affiliate 
     standard was good enough for the financial industry two 
     months ago; it certainly is acceptable now. Thank you again 
     for your efforts; I stand ready to help you in any way 
     possible.
           All the best,
                                                    Jackie Speier,
                           California State Senator, 8th District.

  Mrs. FEINSTEIN. Mr. President, while I was in California, I met with 
the CEOs of the major banks. It became very clear to me at that time 
what they were going to do. They were going to come back here and they 
were going to get a national standard that clearly preempted the 
California opt-out.
  Incidentally, we have modified the amendment I have sent to the desk. 
I know there was some criticisms of the amendment. We have tightened it 
up. I think it will stand the test of scrutiny. This amendment protects 
American consumers' basic privacy rights. It creates a national opt-out 
standard for affiliate sharing. This would give consumers the choice of 
whether their personal information can be shared among unrelated 
companies in a corporate family of companies.
  Under the amendment, a company would have to notify a consumer that 
it intended to share the consumer's information with unrelated 
affiliates and give the consumer the opportunity to opt out of this 
sharing. If the consumer does nothing, the institution is perfectly 
free to share the information.
  This amendment is fully sensitive to the real-life demands of 
business. Where there is a legitimate business need for the 
information, this amendment provides exceptions to the opt-out.
  First and foremost, related affiliates--which are defined as 
affiliates in the same line of business with the same functional 
regulator and with the same brand name--are exempt from the opt-out.
  Second, the amendment does not affect the ability of companies to 
have common databases with their affiliates so long as the information 
is not accessed, disclosed, or used by the affiliate. This is one of 
the arguments they have raised that this exception is a big loophole. 
Answer, untrue. While a common database can exist, the amendment 
explicitly states that an affiliate cannot access or use the 
information in a manner inconsistent with the consumer's opt-out.
  Third, to use consumer information to complete transactions; fourth, 
to protect against or prevent actual or potential fraud or identity; 
next, to comply with Federal, State, or local laws and to do data 
processing, billing, or mailing. This amendment does not affect the 
ability of affiliated companies to do any of these six things. There 
are a number of other standard exceptions.
  Before I go into detail describing the amendment. I will spend some 
time

[[Page 26903]]

talking about the shortcomings of the ``National Consumer Credit 
Reporting System Improvement Act'' with respect to a person's natural 
privacy and why this amendment is needed.
  At the outset, I recognize the author of the bill, Chairman Richard 
Shelby. He has met with me and I am grateful for that meeting. He has 
listened to my concerns. He has made longstanding efforts to balance 
the rights of individual privacy with legitimate business needs. I 
deeply respect the commitment of Senator Shelby to consumer privacy. It 
is well known. He deserves recognition for his work to strengthen the 
privacy provisions of the Driver's Privacy Presentation Act and for 
introducing legislation to require an opt-in for affiliate sharing in 
the 106th Congress.
  In the 107th Congress, he joined me as a cosponsor of the Identity 
Theft Prevention Act. Many of these provisions he has incorporated in 
the bill on the floor today, and I thank him.
  I also thank Senator Sarbanes. I think his record on privacy is 
equally impressive. He fought hard to create the opt-out standards for 
nonaffiliated third parties during enactment of the Gramm-Leach-Bliley 
financial services modernization law. I have the utmost respect for his 
work on privacy legislation. He is a champion of consumer privacy.
  The American people should know this about both of these Senators. It 
is just that Senator Boxer and I have a very strong view on the need to 
give consumers this opt-out on affiliates.
  I also recognize this bill has a number of provisions I strongly 
support. It entitles every consumer to a free credit report. That is 
great. It creates fraud alerts. Great. It creates a national standard 
for truncating credit card numbers on store receipts. That is great.
  I was delighted, because when I introduced identity theft legislation 
earlier this Congress, the chairman and CEO of Visa, Carl Pascarella, 
came and held a press conference and indicated that Visa was not going 
to wait for the bill, they were going to go ahead and truncate all but 
the last four digits, in any event, on their credit cards. As of June, 
all the new merchant terminals using the VISA system--affecting tens of 
millions of Visa credit cardholders--do have that truncation. Shortly, 
Visa will have all other stations truncating as well.
  This morning Senator Kyl and I held a hearing on hackers getting into 
data bases and how you prevent that from happening. Visa testified, and 
it is clear they have taken this very seriously with a very elaborate 
system to get at the problem and to use technology to solve it.
  So all these provisions were included in legislation that I have 
offered over the last 4 years, and I am very grateful to both the 
chairman and ranking member, who are here on the floor, that they have 
been incorporated into this bill. So I say, thank you, Senator Shelby; 
thank you, Senator Sarbanes.
  Now, I think, though, that some of these needed provisions just 
become window dressing, if you really can't protect a person's privacy. 
The affiliate sharing provisions of the legislation would set that back 
because the information age is going to move ahead rapidly. That is one 
of the problems: Technology finds a way of moving ahead so fast before 
we have a chance to see that there is an appropriate regulatory system 
in place.
  So the debate today over this bill is really part of a great struggle 
over whether Americans--ordinary Americans--will have basic control 
over the most elemental parts of their identity, and whether we can 
stop the misuse and commercialization of their most personal 
information.
  Most Americans, I believe, consider their personal information their 
private property. I do. I consider my health data my personal data, my 
financial data my personal data. When I do business with a bank, I do 
not expect to see my mortgages purchasable on the Internet for $15 or 
$20. I do not expect somebody to buy my Social Security number over the 
Internet, or anything of that kind. Nor do I expect the bank with which 
I do business to give my data to a thousand--and it can be a thousand--
of their affiliates so their affiliates can contact me about traveling 
with them, investing with them, that they have a better scheme than my 
checking account. I do not expect that, and guess what. I do not think 
the majority of Americans do, either.
  To give you a sense of the groundswell of public support for privacy, 
I would like to mention a survey of California voters by Fingerhut 
Granados Opinion Research on February 7 of this year.
  The statewide survey found that by a massive 91-to-7 percent margin, 
California voters would favor a ballot proposition--and let me quote 
what it would say--that ``would require a bank, a credit card company, 
insurance company, or other financial institution to notify a customer 
and receive a customer's permission before selling any financial 
information to any separate financial or non-financial company.''
  Mr. President, 91 percent would support an initiative to do just 
that. So they are supporting not opt-out, which is a lower, lesser 
standard, but they are supporting opt-in when it comes to affiliate 
sharing. Similar polls across this great land have reflected a 
landslide of support by Americans for stronger privacy laws.
  In my 10 years in this Senate, I have never seen anything like it. 
There is a groundswell out there, let there be no doubt.
  Here in the Senate we have taken some strong action to protect 
privacy in recent months. In one day, the Senate drafted and passed a 
bill upholding the ``National Do Not Call'' list. Recently, we passed 
legislation limiting e-mail spam. In each of these cases, Congress 
accepted the near unanimous will of the public that there should be 
limits on when and how commercial entities can invade ordinary 
Americans' privacy--be it at their homes from telemarketing calls or on 
their computers from endless e-mail spam.
  These concerns are equally present in the debate over affiliate 
sharing, except the dangers to privacy are so much more insidious. 
Americans are fully aware of telemarketing calls because their dinners 
and evenings at home are interrupted by them. Americans are fully aware 
of spam because their e-mail is clogged with them. In the case of 
affiliate sharing, most Americans are not aware that their personal 
information travels from their bank to hundreds or even thousands of 
other companies.
  What is an affiliate and why should we be concerned about the sharing 
of information among affiliates?
  Affiliates are companies related by common ownership. As one example, 
Travelers Insurance, Diners Club International, Citi Financial, and 
Salomon Smith Barney are all affiliated companies owned by Citigroup. 
So the types of businesses that financial institutions can be 
affiliated with run the gambit: insurance companies, so you can be 
bugged by insurance companies; securities brokerages; mortgage lenders; 
travel agencies; retailers; automobile dealers; collection agencies; 
financial advisers; tax preparation firms. I even think they buy them 
just for this reason.
  In 1999, Congress passed the Gramm-Leach-Bliley Act, which repealed 
portions of the Glass-Steagall Act that prohibited banks from entering 
into affiliations with other lines of business. So it became fair game. 
These financial institutions have moved, in a major way, to affiliate 
themselves with a tremendous array of businesses. These include 
insurance and securities brokerages, as I said, mortgage lenders, ``pay 
day'' lenders, finance companies, and on and on and on.
  It could include investment advisers who are not required to register 
with the Securities and Exchange Commission. These are not mom-and-pop 
companies. The top dozen U.S. banks and financial institutions alone 
control thousands of health and life insurance companies, home mortgage 
companies, car loan lenders, housing developments, securities brokers, 
and other businesses.
  Take a look at this. Citibank alone has 1,736 affiliates which they 
own. They own a mortgage company, an insurance company, a student loan 
corporation, Travelers Life and Annuity,

[[Page 26904]]

Diners Club International, and Salomon Smith Barney holdings. This 
becomes a veritable goldmine of information trading for them, and the 
information that is traded is your personal information that lets an 
insurance company, or a mortgage company, or an investment banking 
company know where to go to get business.
  Morgan Stanley has 628 affiliates, including the Discover Card, Dean 
Witter Realty, Southeastern Energy Corporation, and a number of 
insurance companies.
  Wells Fargo, headquartered in my city of San Francisco, has 777 
affiliates, including, again, a mortgage company, Advance Mortgage, 
Dial Finance Company, Pacific Rim Health Care Solutions, Tower 
Specialists, Norwest Auto Finance, and Auto Risk Managers. Again, a 
veritable treasure trove, a goldmine for the sharing of private, 
personal information.
  Bank of America has 815 affiliates, including T-Oak Apartments, 
Stanton Road Housing, NationsBanc Insurance Agency, and General and 
Fidelity Life Insurance. By mining data from their affiliates, these 
corporations can compile vast dossiers on consumers to use to their 
commercial advantage. An affiliated company can call you up with full 
knowledge of your financial history and offer you credit cards, 
securities, loan consolidation, whether you need it or not, and you 
have no way to prevent the company from using your most intimate 
personal information.
  Consider the following case: Several years ago, Nationsbank paid 
fines of $7 million to the Securities and Exchange Commission and other 
agencies over its sharing of confidential customer financial statements 
and account balances with affiliated securities firms. 
Nationssecurities used the account information to identify those bank 
customers who had expiring certificates of deposit. Sales 
representatives then marketed to these customers highly leveraged 
investments, mischaracteriz- 
ing them as straightforward U.S. Government bond funds. Investors, 65 
percent of whom were over 60 years old, lost millions of dollars from 
this practice.
  While Nationsbank paid a fine for its false and misleading sales 
practices, its sharing of customer information was perfectly legal 
under existing law. We need stronger laws to protect us from the 
potential predations of affiliate sharing. Unfortunately, the Senate 
bill does not rise to this test.
  The 1996 Fair Credit Reporting Act standard on affiliate sharing, 
which is, for the most part, preserved in S. 1753, is not a strong 
national standard. The 1996 act permits financial institutions to share 
``transaction and experience'' information with affiliates without 
restrictions. This experimental standard has proven vague and 
unworkable. Even though the 1996 act has been in effect for 7 years, no 
one can definitively say what the terms ``transaction and experience'' 
information mean.
  When I asked the CRS to explain the FCRA standard, here is what they 
said:

       The [Fair Credit Reporting Act] does not offer a definition 
     of a phrase, nor does the act provide any guidance with 
     respect to what types of information may be included. 
     Furthermore, none of the Federal bank regulators, nor the 
     Federal Trade Commission, have promulgated regulations 
     regarding the definition of ``information solely as to 
     transactions or experiences'' or what information may be 
     included in such.
       Finally, discussions with industry representatives did 
     articulate a consistently used definition of what constitutes 
     a ``transaction or experience'' information.

  In essence, both the House bill and the Senate bill maintain an 
exemption for the sharing of personal information, which nobody has 
defined.
  Seven years after passage of the 1996 FCRA amendments, neither 
Congress, nor the Federal Trade Commission, nor any other agency has 
defined the term. An empty standard is a nonenforceable standard. I 
think America's personal privacy deserves better protection.
  Consider again the sensitive information which could be shared among 
unrelated corporate affiliates if we allow the current standard to 
stand. This chart refers to the information I have just been over: an 
employee's work history, including performance ratings, sick and 
vacation days, safety, whether the consumer is a complainer or not, can 
go out to all affiliates, your certificates of deposit maturity dates, 
so somebody can contact you when that certificate matures; stocks you 
own, so others can approach you. Then there are the personal things, 
such as political contributions, charitable contributions, your 
magazine subscriptions.
  Think about that. These companies develop a personal profile on who 
you are and what you like, and then tell other companies about you. 
Today, I heard testimony at a Senate Judiciary Committee hearing about 
someone who shopped at Victoria's Secret who had their personal 
information used in that way. That is what this allows.
  The collection of this information is not hypothetical. In Great 
Britain, unlike the United States, companies are required by law to 
file a report with the Government on the type of information they 
collect about consumers.
  Here is what Citibank reported to the British Government about the 
type of information it was collecting about British citizens for 
marketing purposes. I think it is likely they collect the same 
information about United States customers. This information includes: 
personal identifiers, financial identifiers, identifiers issued by 
public bodies, personal details, habits, current marriage or 
partnerships, details of other family, household members, other social 
contacts, accommodations or housing, travel movement details, 
lifestyle, academic record, membership of professional bodies, 
publications, current employment, career history.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mrs. FEINSTEIN. Mr. President, I am not aware of a time limitation.
  The PRESIDING OFFICER. There is a previous order to recess for the 
policy meetings at 12:30 p.m.
  Mrs. FEINSTEIN. Mr. President, I ask unanimous consent that I might 
be permitted to continue when the Senate resumes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. FEINSTEIN. I thank the Chair.

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